One of the most important decisions to make when you buy an investment property is whether to appoint a professional property manager or manage the property yourself.
Blogger: Carolyn Parrella, Terri Scheer Insurance
Do-it-yourself property management can appeal to some investors who may see it as an easy way to save money. However, the time and effort that property managers can save landlords, as well as the experience and knowledge they provide, can significantly outweigh the cost for their services.
Property managers will help to find suitable tenants, ensure the correct paperwork is in place, collect the rent, conduct property inspections, liaise with the tenant on behalf of the landlord and, importantly, help to form a professional relationship with their tenant.
Regular inspections are also essential to ensure the tenant is looking after the property. If there is property damage and regular inspections are not being held, this may escalate and become more costly to fix later on. A property manager, however, will take responsibility for inspections and know what to look out for.
Landlords who self-manage their rental property need to be available to attend to maintenance issues promptly. Delayed maintenance can leave landlords susceptible to legal liability claims if a tenant or their guest is injured as a result.
Property managers can identify maintenance issues, liaise with tradespeople, address potential liabilities and help to ensure the property is well cared for.
They also play an important role in risk management. Property managers have experience in screening prospective tenants and have access to databases that list tenants with a history of defaulting on rental payments, damaging property and eviction.
If a dispute arises with a tenant, a property manager should be familiar with the relevant legislation and be able to follow the correct procedures to help resolve the problem as quickly as possible. For example, if a tenant falls behind in their rent, a property manager can ensure the proper notices are issued to the tenant within the required timeframes. This is particularly helpful if the dispute ends up in court and, if the landlord has landlord insurance in place, can also assist with the payment of loss of rent claims.
Regardless of what option property investors choose, a specialised form of landlord insurance is a must.
Landlord insurance is designed to help protect investors from many of the risks associated with owning a rental property. Property managers can also place landlord insurance on behalf of landlords, if the landlord authorises them to do so.
A landlord should consider a tailored landlord insurance policy that covers them for both malicious and accidental damage, their legal liability and loss of rental income. A standard building and contents insurance policy generally won’t cover landlords for many of these risks.